Gold Prices Stage Strong Rebound on Friday Amid Favorable Market Conditions
Gold rates experienced a significant and sharp rebound on Friday, supported by a combination of a weaker US dollar, robust spot demand, and persistent geopolitical uncertainties. This rally marked a notable recovery for the precious metal, which has been navigating a volatile market environment in recent weeks.
Domestic and International Gold Futures Witness Substantial Gains
On the Multi Commodity Exchange (MCX), gold April futures surged by over 2%, closing at an impressive ₹1,55,374 per 10 grams. Similarly, MCX silver March futures demonstrated even stronger performance, jumping almost 3% to settle at ₹2,50,300 per kilogram. This upward movement was not confined to domestic markets alone.
International gold prices also recorded solid gains, with U.S. gold April futures for April closing 1.8% higher at $4,979.80 per troy ounce. The synchronized rise across global and domestic exchanges underscores the broad-based nature of this bullish sentiment toward precious metals.
Key Drivers Behind the Gold Price Rebound
The primary catalyst for this rebound was a significant 0.20% decline in the US dollar index. A weaker dollar makes greenback-priced bullion more affordable for overseas buyers, thereby stimulating demand and pushing prices upward. This currency dynamic played a crucial role in fueling the day's rally.
Furthermore, expectations of imminent US Federal Reserve rate cuts continue to serve as a key support pillar for the yellow metal. A recent report from the University of Michigan indicated that median one-year inflation expectations have fallen to 3.5%, marking the lowest level since January 2025. This development has fueled optimism among investors that the Fed may implement further rate cuts in the coming months, enhancing gold's appeal as a non-yielding asset.
Geopolitical Uncertainties Add to Market Volatility
On the geopolitical front, talks between the United States and Iran commenced on a positive note, yet there remains a lack of significant clarity regarding the timing and substance of the next round of discussions. This ongoing uncertainty contributes to market volatility and reinforces gold's traditional role as a safe-haven asset during times of geopolitical tension.
Expert Analysis: Is Now the Right Time to Buy Gold?
Financial experts anticipate that gold prices will remain volatile in the near term but recommend buying on dips, as the medium to long-term outlook appears decidedly bright. Rishabh Nahar, Partner and Fund Manager at Qode Advisors, elaborated on this perspective, stating, "Our view is that this is not the end of the cycle. In fact, gold may still be in the early innings of a longer structural repricing."
Aggressive Central Bank Buying: A Sustained Bullish Driver
One of the most compelling factors supporting a prolonged upward trajectory for gold is the aggressive buying by central banks worldwide. Nahar highlighted, "Official data already shows central bank gold buying at multi-decade highs, yet several reports suggest that actual accumulation, especially by China, may be materially higher than what is formally disclosed. Historically, large reserve shifts away from the US dollar tend to be revealed with a lag, not in real time. Under-reporting during accumulation phases has precedent, and that opacity itself is a bullish signal rather than a neutral one."
Evolving Retail Demand and Portfolio Allocation Trends
Equally important is the changing nature of retail demand for gold. Gold Exchange-Traded Funds (ETFs) are witnessing strong demand globally, indicating that the yellow metal is no longer being purchased solely as a fear hedge. Instead, it is increasingly being integrated as a deliberate and strategic portfolio allocation, reflecting its growing acceptance as a mainstream investment asset.
Positioning and Supply Constraints: Underappreciated Factors
Another underappreciated factor is market positioning. Nahar pointed out that, unlike US equities, where ownership is crowded and returns are increasingly dependent on continued multiple expansion, gold remains under-owned at a global portfolio level. He noted, "Even a modest reallocation by large pools of capital toward gold can have an outsized impact, given the relatively limited supply growth."
Practical Investment Advice from Market Analysts
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, acknowledged that gold can exhibit significant volatility, particularly in the short term. However, he offered practical guidance for investors, stating, "We recommend that if holdings have risen more than 20%, it should be enough at the moment since the yellow metal has appreciated sharply for the last three years." He added that extremely risk-averse individuals might consider holding a higher allocation, but cautioned that current levels may already reflect substantial appreciation.
Disclaimer: This analysis is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms and not of Bharat Horizon. Investors are strongly advised to consult with certified financial experts before making any investment decisions, as market conditions are subject to rapid change and individual circumstances can vary significantly.
